Stuck In The Middle

kingstreet

When did you take out your Nationwide mortgage, before or after 30 April 2009?

If before, your reversion rate is base mortgage rate, 2.5%, which with 1.5% added is 4.0%.

If after, your reversion rate is standard variable rate, 3.99%, which with 1.5% added is 5.49%.

What is the Leeds requirement for rental income to exceed mortgage interest? I used generic 125% at 6% which covers most eventualities.

kingstreet

Leeds calculator seems to suggest 130% at 5.99%, so my way would actually get you more. Seems the Leeds won't lend you more than £77,051.

http://www.leedsbuildingsociety.co.uk/mortgages/btlcalculator.html

dkb

kingstreet wrote: »

When did you take out your Nationwide mortgage, before or after 30 April 2009?

If before, your reversion rate is base mortgage rate, 2.5%, which with 1.5% added is 4.0%.

If after, your reversion rate is standard variable rate, 3.99%, which with 1.5% added is 5.49%.

What is the Leeds requirement for rental income to exceed mortgage interest? I used generic 125% at 6% which covers most eventualities.

It was after April 2009. I thought I took a 4.79% deal plus 1.5% (I know it definitely wasnt 3.99%), best check my records.

Its looking like I cant move to BTL anyway as a result of the rental income to exceed mortgage interest rule. How does that work because surely on the 75% one a monthly payment by me of £262 a month is a good fit for the rent of £500 being paid to me? I would have thought even the 386 to 500 was acceptable.

dkb

I've used that tool but it appeared confusing. I put in 500 in the first box and 115000 in the second and got the same results as you (130%). Depending onthe figures you put in it switches between 70% and 130%

JimmyTheWig

dkb wrote: »

Ah. Rental income doesnt fit. I only charge £500

Is this pcm or four-weekly?

dkb

JimmyTheWig wrote: »

Is this pcm or four-weekly?

Its per calendar month

kingstreet

dkb wrote: »

It was after April 2009. I thought I took a 4.79% deal plus 1.5% (I know it definitely wasnt 3.99%), best check my records

Your current rate is 4.79 + 1.5, yes.

However, you mention a fix ending in May. That fix will have a reversion, or follow-on rate, normally 3.99%. That means your new rate from June will be the 5.49% I mentioned.

As I suggested earlier, contact Nationwide and ask them your follow-on rate, or look at your original mortgage offer or key facts document. On there it will tell you, in section 6, the follow-on rate at the time. You may need to have it updated so you know the current rate.

I have every expectation it will be 3.99 + 1.5 = 5.49%.

In conclusion, you have valuation issues, rental income issues and a rate which will actually fall in May/June. Are you sure you really want a remortgage?

dkb

kingstreet wrote: »

Your current rate is 4.79 + 1.5, yes.

However, you mention a fix ending in May. That fix will have a reversion, or follow-on rate, normally 3.99%. That means your new rate from June will be the 5.49% I mentioned.

As I suggested earlier, contact Nationwide and ask them your follow-on rate, or look at your original mortgage offer or key facts document. On there it will tell you, in section 6, the follow-on rate at the time. You may need to have it updated so you know the current rate.

I have every expectation it will be 3.99 + 1.5 = 5.49%.

In conclusion, you have valuation issues, rental income issues and a rate which will actually fall in May/June. Are you sure you really want a remortgage?

You know what, I might just move back in

Thanks for your replies on this, gives me a bigger picture of where I stand.

dkb

One final question. How is that calculator working it out? I would have thought it calcualted how much you would be paying on the mortgage against how much you would be receiving in rent. That doesnt seem to be the case. It seems to be based on the house value

kingstreet

It would normally take the lower of the maximum loan to value, or the maximum mortgage payment, based on the input rental income figure.

For example, a rental income figure of £500 equates to 130% of £384 monthly mortgage interest. If you assume the rate is 5.99%, that equates to a mortgage of £76,928.

In these circumstances, it uses the rental income as the determinant.

If you input £1,000 in the rent, it would probably then quote you the maximum loan to value, perhaps 80%? as that would be the lower of the two.

Try it. Put £1,000 in as the rent and £115,000 in as the property price. Does it return £92,000, 80% of the value?